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Hardy: Size matters for ECB QE

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It now seems inevitable that the ECB will announce large-scale quantitative easing this week. Size and ECB participation in risk-sharing will be key factors to watch, says Saxo Bank’s Head of FX Strategy John Hardy.

It is a given that the ECB will launch QE on Thursday after French President Francois Hollande appeared to let the cat out the bag earlier this week. The euro has been very weak in recent market cycles, and it remains to be seen to what extent the market has already priced in any ECB QE.

Two key factors to watch out for will be the size of the QE programme and risk-sharing between Eurozone countries and the ECB, according to John Hardy. He expects the programme to be more than EUR 500 billion, saying anything below half a trillion euro would be a disappointment to the markets.

John Hardy says the ECB meeting is a very expensive event to trade following the SNB’s surprise move last week to scrap the euro ceiling.The markets have been very volatile since then and the volatility risk is very high, which should be respected, says John.